February 17, 2008 / / No Comments

That’d be Google-Yahoo-Microsoft as opposed to me getting off my butt and putting on my running shoes (you’ll see that reference come full circle by the end of this post)… yup, this is another post of thoughts connecting links for the week together.

It’s been interesting watching the news about Microsoft’s not so friendly bid for Yahoo over the past two weeks. And, having just had my first ever trip to Silicon Valley, it was even more interesting chatting with folk in taxis and bars over there than closer to home. 🙂

The response from Google was a bit of a surprise – Yahoo and the future of the Internet. I’m pretty sure Googlers are not naive (hecks, they’ve heeded Microsoft’s past mistakes and already set up shop close to the politicians, see: Google goes to Washington) so sulking over the MS proprietary monopoly when they’ve all but built one of their own whiffs of a do-some-evil agenda. Robert X. Cringely’s latest post is worth a read – Plan B: What if Microsoft doesn’t really hope to buy Yahoo at all? His take on this news is more than a little interesting (and a reminder of Microsoft’s past antics). Whilst it’s no secret that Microsoft wants a slice of the ‘oh-so-much-bigger-than-software’ online advertising market, I’m not convinced acquiring Yahoo is the way to achieve it. But I’m not surprised at the bid either. It’s got Steve Ballmer’s stamp all over it and, with Bill off in July, the timing is perfect to bump Microsoft into a new direction.

What does surprise me is how little talk there is about the other unofficial merger that has been going on in the GYM over the past 18 months. A merger that really ought to have MS and Yahoo worried, at least in terms of their consumer markets in the USA and Europe. Because it isn’t official, there’s none of the messy legal, shareholder and regulatory issues to worry about, leaving both companies to focus on their own core businesses and generate revenue that benefits both. If it were an official merger, I wonder, would the company become called Goople?

Potentially, Google+Apple is in a far stronger position than Microsoft+Yahoo. Google has the web brand, Apple has the portable hardware brand. Both are strong growth areas. Google and Apple seem to get along, and most of their products are complements rather than substitutes. Two articles appeared on the same day last week that highlighted their combined strength:

It appears that the ‘experts’ at Mobile World are surprised that people using iPhones are increasing their use of Internet services when other mobile phone users are not. Google highlighted the difference – 50 times more search requests coming from iPhones than any other mobile handset.

¨We thought it was a mistake and made our engineers check the logs again¨ – Vic Gundotra, Google

The traditional argument has always been that data costs prevent surfing the web from your mobile. Well, for starters, that’s still mostly true. Anyone who uses an iPhone (in the UK at least) has to sign up for an all-inclusive data plan that O2 introduced with the iPhone. That immediately eliminates the data cost issue for iPhone users (in the UK at least, not so when travelling abroad). All other mobile tariffs (which the large majority of non-iPhone users are on) discourage using the Internet due to high costs and charging based on amount of data downloaded. It is impossible to control or know how much data you’ve downloaded (versus having a vague idea how many minutes you’ve spent talking or how many text messages you have sent) beyond avoiding downloading any at all. So, to lay it out as clearly as possible, using the UK as an example:

  • All iPhone users are on an all-inclusive data plan = unlimited* web browsing for zero extra cost = plenty of reasons to start surfing the web more
  • Virtually all non-iPhone users are on a standard mobile tariff = web browsing/email charged at ridiculously high costs per Mb = plenty of reasons to avoid surfing the web

*There usually is a limit. On my data plan (T-Mobile), it’s 10Gb per month

Apple struck gold by how they handled the telecoms provider. If the iPhone were available on all networks and all mobile tariff plans, the percentage taking the all-inclusive data plan would probably be lower and so would web searches with it.

But it’s not just data cost, its also about usability. And that’s where Apple+Google comes in. If you are going to have a go at surfing the web on a mobile device, chances are you’ll start with Google. And Google’s online services work well on mobiles – Google Search, Google Mail, Google Reader, Google Maps… Added to that, the iPhone user interface makes it easy to switch between applications – phone, calendar, music player, web browser…

I’m on an all inclusive data plan. The one and only reason why I didn’t go for the iPhone (well, apart from it being tied to O2) was the lack of 3G support. When I’m in a wireless zone, the laptop is usually out to play. On the train… that’s when 3G is proving to be hugely beneficial. And that’s why I’m using a T-Mobile Vario III (aka TyTN II) running Windows Mobile instead of an iPhone. Now, Windows Mobile has some seriously nice features. But the user interface isn’t one of them. For even the most basic activities, you need either long narrow finger nails or the stylus. Fingers and thumbs alone are no good (not when the phone has no fixed number pad).

Whether Microsoft likes it or not, Google trumps Windows Live in terms of web-based user interface, and iPhone OS X trumps Windows Mobile in terms of mobile operating system user interface. That’s a terrible position for Microsoft to have landed in, and I don’t see the Yahoo acquisition solving it…

On the bid for Yahoo, Steve Ballmer commented that the consumer software business is becoming a media business. The following comment in Wired Magazine (Feb 08 print ed) made me chuckle:

¨Google and Microsoft are both working on software that will appeal to physicians and patients alike. Kind of gives new meaning to ‘blue screen of death,’ don’t it?¨

Chuckle aside, Nike and Apple made headlines with their joined up Nike+iPod campaign. You have a sensor in your Nike trainers, connect a receiver to your iPod and get instant feedback about how long and far you have been running. Now add Google’s Health plans into the mix and some interesting possibilities start to appear on the horizon…

Is the GYM turning into a GAYM? Maybe Microsoft needs some running shoes 😉

Technorati tags: Microsoft; Yahoo; Google; Apple

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